Entrepreneurship, Wage Employment and Controlin an Occupational Choice Framework

We combine two empirical observations in a general equilibrium occupational choice model.The first is that entrepreneurs have more control than employees over the employment ofand accruals from assets, such as human capital. The second observation is thatentrepreneurs enjoy higher returns to human capital than employees. We present an intuitivemodel showing that more control (observation 1) may be an explanation for higher returns(observation 2); its main outcome is that returns to ability are higher in higher controlenvironments. This provides a theoretical underpinning for the control-based explanation forhigher returns to human capital for entrepreneurs....